NewRiver Retail has acquired three shopping centres in the UK out of administration at a 10%-plus yield.
NewRiver Retail has acquired three shopping centres in the UK out of administration at a 10%-plus yield.
The UK REIT purchased the portfolio for £24 mln (€29 mln) from financial advisory group Zolfo Cooper, which acts as administrator on behalf of special purpose vehicles controlled by Clydesdale Bank. The transaction reflects a 10.4% net initial yield.
NewRiver was appointed asset manager of the portfolio by Zolfo Cooper when it was placed into administration in December 2012. The asset management appointment provided the company with the opportunity to evaluate the assets, which are believed to offer potential for value creation.
In a statement, NewRiver said it has identified a number of asset management and development initiatives to enhance the income and capital value of the assets.
The portfolio comprises the 99,500 sq ft (9,200 m2) Newkirkgate shopping centre in Edinburgh; the 183,000 sq ft Beacon Centre in North Shields, Tyne & Wear; and the 25,000 sq ft La Porte Precinct in Grangemouth, near Falkirk. The assets offer a combined weighted average lease expiry of 5.3 years and boast an occupancy rate of 94%.
The acquisition is being funded through the company’s Bravo II joint venture partnership, advised and managed by Pacific Investment Management Company. Both parties are taking a 50% equity stake in the acquisition, which was funded from existing cash resources with a debt facility planned to be drawn down on in due course.
Allan Lockhart, property director at NewRiver Retail, said: 'Following our oversubscribed equity fundraise in July, we have undertaken four major transactions, the majority of which have been off-market, totalling around £200 mln at an average yield of 11%. This demonstrates our ability to deploy our shareholders capital with speed but without compromising our investment strategy.'
